Why Microsoft will beat Apple’s iTV in the living room

Much ado has been made about the fabled Apple iTV. Last spring we heard that the company was planning a cloud-based TV service, and that rumor received new legs when Walter Isaacson’s posthumous Steve Jobs autobiography was released. In the book, Jobs discussed that the television – and the living room – was the next domain Apple would conquer.

“I’d like to create an integrated television set that is completely easy to use,” he told Isaacson. “It would be seamlessly synced with all of your devices and with iCloud. It will have the simplest user interface you could imagine.”

Who will win the living room has become a very real, very important question, and manufacturers of all shapes and sizes have thrown their ball in this court.

For its part, Google has made attempts thwarted by a variety of problems, from content to manufacturing partners that have lost faith in the product. While it’s not out of the running, it’s sort of starting from scratch with the coming revamp. Platforms like Roku and Boxee are small enough that we don’t consider them viable options to conquer the living room, although they are worthwhile alternatives for casual buyers looking to solve smaller problems than connecting all of their entertainment. But they each have serious limitations: Boxee has been slow with updates and adding content, and Roku is sort of a minimalist approach to Internet TV.

Microsoft has played second (or third) fiddle when it comes to a variety of next-gen products, but this is one which it firmly has a handle on. There’s ample excitement about an iTV, but brace yourselves: when it comes to the living room, Microsoft is going to win.

Because the console isn’t dead

If there’s one segment that Microsoft has a firm grip on that Apple can’t even begin to touch it’s gaming. The Xbox ecosystem has been and continues to be a huge seller for Microsoft, and despite being six years it’s still insanely popular with new buyers.

The bundle is an attractive thing to consumers. Everyone wants to get the most out of one platform or one device that they can. People like the idea of combining their digital identity and ownership instead of spreading it out among different developers, applications, and brands. And let’s face it: Microsoft can offer a much more complete package when it comes to your living room content.

Apple doesn’t have a gaming platform or console to speak of, and this is a big part of the living room. Most of us would at least want the option of gaming and if there’s something available that can collectively hold everything we would want to use a TV to do, then it’s going to win.

And that’s why it does. Apple TV has been a popular device, but until it can offer a comprehensive package like Xbox does, it won’t win. We don’t think Apple has any such plans, either. It wouldn’t make sense for the company to try and win over a demographic that would be incredibly difficult to convince.

Now the purported iTV could seemingly turn the model on its head with its built-in connectivity and cloud-based content library. If you bought an iTV, would it behave like other Apple devices and lack ports to connect to devices outside the walled garden? If so, it’s dead on arrival, so we’d assume not. Even still, there are a few other things that will pave the way to Microsoft’s success over Apple (including the fact the supposed TV would cost double the industry standard).

You could argue that the iTV wouldn’t need a console, that the connectivity is built right into the thing. But what if you want the console? What if you want a fully-fledged entertainment experience for your living room? And when the next iteration of the Xbox arrives, we’re fairly confident it will include a Blu-ray player. The gaming console might be showing its age, but it’s far from dead and it’s still a major enough medium to drive sales.

Not only that, but people only replace their TVs about every 6-8 years — a number which has dropped, but is no where near the replacement cycle Apple has established with its products. Who wants to live with an outdated iTV? It would hamper buyers who are on the iTV fence. The device is speculated to be quite expensive – which wouldn’t be a surprise given other Apple pricing. Dropping that much cash on something you know is going to be outdated but that you’ll probably need to live with longer than your iPhone is something of a hurdle.

Because you need full “Search,” not just Siri

This should throw you for a loop: Apple may have Siri, but Microsoft has Bing + Kinect. At first glance, that makes little to no sense, but allow us to dig a little deeper. The living room isn’t the most natural place for the traditional browser experience. That said, an element of search-and-find is incredibly important, especially when you’re navigating the vastness of your digitally-owned and cloud-based libraries.

To the end, Microsoft has introduced the Kinect. The motion-gaming system has been integrated with Xbox for voice commands as well. Gesture and voice allow you to wander through your collection, and Bing (which has repurposed itself as a “doing engine”) plays into this by giving you the ability to find what you’re looking for – anywhere. If you search for “Star Wars” you’ll be presented with a number of options (gaming, TV episodes of Robot Chicken available on Hulu Plus, the movie) so you can select which you want.

An Apple iTV would probably use Siri for the same purpose. While Siri has been fairly impressive, it’s limited compared to Bing + Kinect. For starters, Siri alone is Apple’s own search engine. In order to give an iTV the capabilities that Kinect + Bing give Xbox Live would mean Apple needs to buy, partner with, or create its own search engine that it can completely tailor to Siri. Again, Apple could do this – but it’s many steps behind where Microsoft already is. Microsoft will continue to build off this innovation, and Apple still needs to get there.

Because iTunes and the App Store won’t cut it

There is no doubt that compared to most, Apple has a storied reputation when it comes to striking deals with content rights holders. ITunes has largely made copyright owners and artists very happy, and users have clearly taken to a system they see as far more fair than the old one.

But this doesn’t necessarily translate to the TV. First of all, iTunes alone will not be enough to carry an Apple iTV platform. That system simply isn’t fast enough to serve as an all-purpose content service for users. Second of all, Apple would need to develop relationships with big cable networks – something that Microsoft has been very good at doing.

Microsoft is a veritable veteran in an area where others – like Google – are still trying to get footing. It was part of what seriously set back Google TV. And it’s not just pulling in content, it’s creating native Microsoft interfaces to identify and solidify its branding. It’s been a long-time in the making and not something Apple would be able to introduce right away. If you need a reminder, here’s just a few of the things you have access to Xbox Live membership (which doesn’t require the rent/pay-as-you-go system that Apple TV currently does):

ESPN

Hulu

Hulu Plus

Netflix

TODAY/MSNBC

EPIX

HBO GO

Comcast Xfinity OnDemand

Crackle

SyFy

iHeartRadio

Last.fm

YouTube

For the record, with the current Apple TV get WSJ Live, NBA Game Time, NHL GameCenter, and MLB.tv, Netflix, YouTube, and Vimeo, and whatever you buy on iTunes.

Once Apple launched the iPhone and started its App Store, it had taken mobile. And while that might erode PC sales, it has nothing to do with TV, and it’s not going to. The best App Store doesn’t translate into the best living room content.

Microsoft has been silently waging this war for years while Apple has tip-toed into the arena. And the work has paid off: Apple won’t be able to ride the enthusiasm of its fanboys with an iTV, and Microsoft could easily take home the living room title.

Of course, we don’t know everything there is to know about the iTV – in fact we know almost nothing. But whatever traction Apple could gain over the next several months or year simply won’t be enough to topple everything Microsoft has done up until this point.